Chancellor George Osbornes plan to improve UK productivity includes axing plans to make new buildings carbon neutral.
The government will no longer be introducing requirements for zero carbon homes in 2016 and zero carbon non-domestic buildings in 2019.
As part of a range of planning measures announced by the Treasury last week, it was confirmed that the government does not intend to proceed with the zero carbon allowable solutions carbon offsetting scheme, or the proposed 2016 increase in on-site energy efficiency standards.
The UK Green Building Council said that it had received confirmation from civil servants that the zero carbon policy for non-domestic buildings will also be discarded as part of the changes.
In response to the announcement, UK-GBC chief executive Julie Hirigoyen said: Let us be in no doubt this announcement is the death knell for zero carbon homes. It is short-sighted, unnecessary, retrograde and damaging to the house building industry which has invested heavily in delivering energy efficient homes. Britain needs more housing but there is no justification for building homes with a permanent legacy of high energy bills.
The government has not consulted the house building industry sufficiently on this sudden announcement. This arbitrary and regressive action was not mandated by the Conservative Party manifesto. Just last year the Conservative-led coalition government enabled the allowable solutions policy in legislation. This stop-start policy making approach gives industry no confidence in the governments vision for a low carbon economy and condemns new home owners to higher energy bills.
Building firms Willmott Dixon and Lend Lease also criticised the policy switch.
Rob Lambe, managing director of Willmott Dixon Energy Services, said: Since the original zero carbon announcement Willmott Dixon has been supportive of setting a long term trajectory enabling industry to invest with confidence. This announcement seriously undermines industry confidence in government policy and will diminish future investment.
Paul King, managing director of sustainability, communications & marketing at LendLease Europe, said: "Industry needs as much policy clarity and consistency as possible in order to invest and innovate, and after almost 10 years of commitment and progress, UK house-builders and developers have come a very long way. It is therefore extremely disappointing that the government has today removed a world-leading ambition for all new homes to be zero carbon from 2016."
However, while the big contractors grumbled, the SME sector, as represented by the Federation of Master Builders (FMB) welcomed the move.
FMB head of external affairs Sarah McMonagle said: The UKs new homes have never been so energy efficient but the target for all new homes to be zero carbon by 2016 was overly ambitious. The attempt to get down to the zero of zero carbon through proposed payments for off-site mitigation and further renewable technology threatened to impose significant additional costs on SME house builders C in short, this would have held back their ability to build more new homes. Small local builders typically build more bespoke homes, with a strong focus on quality and high standards of energy efficiency. Yet over recent years it has been these smaller firms which have been hit disproportionately hard by the rapid pace of change. This burdensome regulation came at a time when SME house builders were beginning to recover and build more new homes which is crucial if we want to keep pace with the demand for new housing. The government is therefore right to remove the unnecessary zero carbon standards which threatened to perpetuate the housing crisis.
She added: Arguably, when it comes to reducing the UKs carbon emissions, our new homes are not the real issue C what we must focus on is our improving our existing homes. The UK is legally committed to reducing its carbon emissions by 80% by 2050 and given that 85% of our existing homes will still be standing in 35 years time, the government must do more to address our leaky buildings. Refurbishing our existing homes is a far more cost effective way of tackling carbon reduction compared with trying to push for zero carbon. Considering we have some of the oldest and least energy efficient housing stock in Europe, the new government is showing little to no interest in improving it.